Each January, the stock market tends to kick things off with an encouraging performance. There are a few contributors, but one of them is that investors sell off a bunch of stocks in December before that tax year ends, then they put that money back into other investments in January.
When you see the markets doing well in January, it shouldn’t prompt you to suddenly invest more or to start moving around your allocations. You may find that your portfolio gains value in January, but that shouldn’t be a signal to sell high and increase your risk with newer investments. Instead, focus on the long haul. If you want to increase how much you contribute to your investments in January, it’s a great time to evaluate your priorities for the coming year. But don’t count on a boom market to get you rich overnight.